What does invoice fraud look like in construction?
Mostly it looks like an ordinary invoice. Billing schemes are construction’s most common fraud pattern — 38% of cases, nearly double the all-industry rate — and construction carries the fourth-highest median fraud loss of any industry at $250,000 per case. The mechanism is not clever: an invoice that nobody checked against a delivery record.
The shapes it takes
A shell supplier that delivers nothing and invoices anyway. A real supplier whose invoice quantity is quietly larger than what came off the truck. The same delivery ticket referenced on two invoices, both paid. A pro-forma paid, and then the final invoice paid again. Rates a few percent above the purchase order — small enough that no single invoice looks wrong.
None of these are sophisticated. They are all variations on the same theme: a claim about what was supplied, made by the person who wants to be paid for it, and checked by nobody.
Why construction is exposed
The site is physically distributed, deliveries arrive at gates rather than warehouses, and the person who signed the ticket is rarely the person who reads the invoice six weeks later. Quantities are cumulative — one purchase order, forty deliveries, one monthly invoice — so a reconciliation that would be trivial for a single transaction becomes arithmetic nobody has time for.
And the honest leakage compounds it. Duplicate and erroneous payments run 0.8–2% of disbursements in cross-industry benchmarks, and only half to two-thirds of invoices match cleanly on the first pass at a typical organisation. Most of the money that leaves incorrectly leaves without anybody intending it to.
What actually closes the door
Three-way matching, and it is not close. Every billing scheme in that 38% depends on the same precondition: an invoice that is never verified against a receipt. Remove the precondition and the scheme has nowhere to stand.
One caution worth stating plainly, because we would rather say it than be caught assuming otherwise: there is no neutral study quantifying how much construction is overbilled. We are not going to invent a headline percentage for it. The fraud data and the mechanism make the case without one.
References
- module: /modules/three-way-matching/ — ACFE, Occupational Fraud 2024 (construction median loss; billing-scheme share)
Zepth is the construction project delivery platform — it runs construction, procurement and asset management on one record, and does the work: reading the drawings, reviewing the submittals, matching the invoices and flagging the risks, with a human sign-off on anything consequential.
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